ABB to Sell Remaining Stake in Hitachi Energy to Hitachi

Rhea-AI Summary

ABB has agreed to divest its remaining 19.9% stake in Hitachi Energy to Hitachi, generating approximately $1.679 billion. This decision follows a call option exercised by Hitachi, set in December 2018. ABB anticipates net cash inflows of around $1.425 billion upon completion, expected in Q4 2022, subject to regulatory approvals. The CFO, Timo Ihamuotila, expressed optimism about the deal enhancing ABB's balance sheet and capital allocation flexibility.

Positive

• ABB expects to receive approximately $1.425 billion in net cash inflows upon sale completion.
• The transaction is expected to strengthen ABB's balance sheet and enhance capital allocation flexibility.

Negative

• None.

ZURICH--(BUSINESS WIRE)-- ABB has reached an agreement to divest to Hitachi, Ltd. (Hitachi) its remaining 19.9 percent equity stake in the Hitachi Energy joint venture that was formed from ABB’s Power Grids business in 2020, with Hitachi holding a stake of 80.1 percent. Hitachi has exercised its call option that was agreed between the parties in December 2018.

The call option’s exercise value is $1.679 billion. The companies have agreed to settle remaining obligations relating to the original transaction, and ABB will continue to provide transition services to Hitachi Energy for them to fully separate from ABB’s systems. ABB does not expect to record any significant gain or loss as a result of the sale. ABB expects net positive cash inflows of approximately $1.425 billion upon closing of the sale. The transaction is subject to regulatory approvals and closing is expected to happen in the fourth quarter 2022.

“We are delighted to have agreed on the final part of the transaction earlier than expected and on favorable terms. This will further strengthen our balance sheet and give us additional flexibility in our capital allocation decisions,” said Timo Ihamuotila, Chief Financial Officer of ABB.

ABB (ABBN: SIX Swiss Ex) is a leading global technology company that energizes the transformation of society and industry to achieve a more productive, sustainable future. By connecting software to its electrification, robotics, automation and motion portfolio, ABB pushes the boundaries of technology to drive performance to new levels. With a history of excellence stretching back more than 130 years, ABB’s success is driven by about 105,000 talented employees in over 100 countries. www.abb.com

Hitachi drives Social Innovation Business, creating a sustainable society with data and technology. We will solve customers' and society's challenges with Lumada solutions leveraging IT, OT (Operational Technology) and products, under the business structure of Digital Systems & Services, Green Energy & Mobility, Connective Industries and Automotive Systems. Driven by green, digital, and innovation, we aim for growth through collaboration with our customers. The company’s consolidated revenues for fiscal year 2021 (ended March 31, 2022) totaled 10,264.6 billion yen ($84,136 million USD), with 853 consolidated subsidiaries and approximately 370,000 employees worldwide. For more information on Hitachi, please visit the company's website at https://www.hitachi.com.

Important notice about forward-looking information
This press release includes forward-looking information and statements which are based on current expectations, estimates and projections about the factors that may affect our future performance. These are generally identifiable by statements containing words such as “expects”, “estimates”, or similar expressions. However, there are many risks and uncertainties, many of which are beyond our control, that could cause our actual results to differ materially from the forward-looking information and statements made in this press release. These include business risks associated with the volatile global economic environment and political conditions, costs associated with compliance activities, changes in governmental regulations and currency exchange rates and such other factors as may be discussed from time to time in ABB Ltd’s filings with the U.S. Securities and Exchange Commission, including its Annual Reports on Form 20-F. Although ABB Ltd believes that its expectations reflected in any such forward-looking statement are based upon reasonable assumptions, it can give no assurance that those expectations will be achieved.

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ABB Ltd

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Media Relations

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Investor Relations

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Source: ABB Ltd

FAQ

What percentage of the Hitachi Energy joint venture was sold by ABB?

ABB sold its remaining 19.9% equity stake in the Hitachi Energy joint venture.

How much is ABB receiving from the sale of its stake in Hitachi Energy?

ABB is receiving approximately $1.679 billion from the divestment.

When is the sale of ABB's stake in Hitachi Energy expected to close?

The sale is expected to close in the fourth quarter of 2022.

What is the significance of the call option exercised by Hitachi?

The call option allows Hitachi to acquire ABB's remaining stake in the joint venture, which was initially agreed upon in December 2018.

Will ABB report any significant gains or losses from this transaction?

ABB does not expect to record any significant gain or loss from the sale of its stake.